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10 Stocks Warren Buffett is Selling

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·11 min read
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In this article, we discuss the 10 stocks Warren Buffett is selling. You can skip our detailed discussion on Buffett's history, investment philosophy, and hedge fund performance, and read the 5 Stocks Warren Buffett is Selling.

Warren Buffett, the chief of Nebraska-based Berkshire Hathaway, recently penned a letter to shareholders at his company and announced that he was halfway through donating the entirety of his wealth to charity, a pledge he had made back in 2006. Buffett, one of the most renowned investors in the world — his investments have a portfolio value of over $270 billion — told shareholders that he now owned 238,624 shares in his firm compared to 474,998 shares in 2006. His present stake, consisting of Class A shares, is still worth about $100 billion.

The Buffett announcement came at the heels of his decision to resign from the board of the Bill and Melinda Gates Foundation, one of the largest charity groups in the world, just weeks after owners Bill Gates and Melinda Gates revealed that they would be ending their marriage. Buffett donated some of his Berkshire shares to the foundation, bringing his total contributions to the charity to $33 billion. The legendary investor, who hails from Omaha, has made a name for himself on Wall Street with more than five decades of value investing.

Some of the top holdings of his fund at the end of the first quarter of 2021 were Apple Inc. (NASDAQ: AAPL), The Coca-Cola Company (NYSE: KO), and Bank of America Corporation (NYSE: BAC), among others. Buffett has pioneered a long-term growth strategy in the investing universe that has few parallels in history, averaging more than 20% in returns for shareholders over the past fifty years. Most of the top holdings in his portfolio have been there for decades. Buffett usually invests consumer goods and financial stocks, although this is now changing.

Berkshire Hathaway has been lagging behind peers in the finance world over the past five years, averaging 14% in returns. Compared to the performance of the S&P 500 over the period, which has returned 18%, this represents nothing short of a crisis for the fund. Some of this lull, in relative terms, can be attributed to the reluctance of Buffett to invest in high growth technology offerings that have minted many billionaires in the past decade. A closer look at the stocks Buffett has been selling recently, discussed in detail below, can shed light on his future strategy.

The success of old-school investors like Buffett is an exception in the world of finance that is reeling from tech-led disruption. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

With this context in mind, here is our list of the 10 stocks Warren Buffett is selling. These were ranked according to the investment portfolio of Berkshire Hathaway at the end of the first quarter of 2021. Buffett sold off his entire stake in some of these stocks and significantly reduced stake in others.

Stocks Warren Buffett is Selling

10. AbbVie Inc. (NYSE: ABBV)

Number of Hedge Fund Holders: 72

AbbVie Inc. (NYSE: ABBV) is a biopharma firm based in Illinois. It is ranked tenth on our list of 10 stocks Warren Buffett is selling. The stock has returned 20% to investors in the past year. At the end of the first quarter of 2021, Berkshire Hathaway owned more than 22 million shares in the company that were worth over $2.4 billion, representing 0.91% of the portfolio. Buffett has trimmed his stake in the firm by 11% compared to last year.

AbbVie Inc. (NYSE: ABBV) is a solid option for investors who want to retire early with steady income on the side. On June 18, the firm declared a quarterly dividend of $1.20 per share, in line with previous. The forward yield was 4.53%.

At the end of the fourth quarter of 2021, 72 hedge funds in the database of Insider Monkey held stakes worth $5.9 billion in AbbVie Inc. (NYSE: ABBV), down from 83 in the preceding quarter worth $6.9 billion.

Unlike Apple Inc. (NASDAQ: AAPL), The Coca-Cola Company (NYSE: KO), and Bank of America Corporation (NYSE: BAC), AbbVie Inc. (NYSE: ABBV) is one of the stocks Warren Buffett is selling.

9. Sirius XM Holdings Inc. (NASDAQ: SIRI)

Number of Hedge Fund Holders: 24

Sirius XM Holdings Inc. (NASDAQ: SIRI) is a cable and satellite service provider that operates on a subscription basis. It is placed ninth on our list of 10 stocks Warren Buffett is selling. The company’s shares have returned 15% to investors in the past twelve months. By the end of March this year, Buffett had trimmed stake in the company by 13% compared to the holding at the end of the fourth quarter of 2020. Still, Berkshire is the biggest stakeholder in the company with a $265 million stake.

In quarterly earnings results for the first quarter of 2021, posted in April, Sirius XM Holdings Inc. (NASDAQ: SIRI) reported earnings per share of $0.07, beating market predictions by $0.01. The revenue over the period was over $2 billion, up 5% year-on-year.

Out of the hedge funds being tracked by Insider Monkey, Nebraska-based investment firm Berkshire Hathaway is a leading shareholder in Sirius XM Holdings Inc. (NASDAQ: SIRI) with 43 million shares worth more than $265 million.

Unlike Apple Inc. (NASDAQ: AAPL), The Coca-Cola Company (NYSE: KO), and Bank of America Corporation (NYSE: BAC), Sirius XM Holdings Inc. (NASDAQ: SIRI) is one of the stocks Warren Buffett is selling.

8. StoneCo Ltd. (NASDAQ: STNE)

Number of Hedge Fund Holders: 39

StoneCo Ltd. (NASDAQ: STNE) is a Brazilian financial technology firm. It is placed eighth on our list of 10 stocks Warren Buffett is selling. The company’s shares have returned 61% to investors in the year. Buffett has trimmed his stake in the company by 25% in the first three months of this year compared to his holding at the end of last year. At the end of March, the Buffett fund owned 10.6 million shares in the company worth over $654 million, representing 0.24% of the portfolio.

On April 13, investment advisory UBS gave StoneCo Ltd. (NASDAQ: STNE) stock a Buy rating with a price target of $87, implying an upside potential of 28%, noting the growth catalysts for the firm as it became a full financial service provider in Brazil.

At the end of the first quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in StoneCo Ltd. (NASDAQ: STNE), down from 47 in the previous quarter worth $3.6 billion.

Unlike Apple Inc. (NASDAQ: AAPL), The Coca-Cola Company (NYSE: KO), and Bank of America Corporation (NYSE: BAC), StoneCo Ltd. (NASDAQ: STNE) is one of the stocks Warren Buffett is selling.

In its Q4 2020 investor letter, Schroder Investment Management Group highlighted a few stocks and StoneCo Ltd. (NASDAQ: STNE) was one of them. Here is what the fund said:

“The Fund recently added to its payments exposure through an investment in the Brazilian company, StoneCo Ltd. (“Stone”).

We see much potential inherent in a market that has embraced digitalisation, but which remains underdeveloped. Stone is a digital-first and disruptive player that has already made a name for itself taking on a rather cosy oligopoly; and we feel that its banking and credit offers represent very attractive growth opportunities.

Brazil is a poorly managed economy, which has typically only grown modestly in real terms. However, the penetration of non-cash payments is relatively low, at around 40% of personal consumption expenditures (PCE) – less than half that of developed markets (which are themselves still growing strongly) – and so they will continue to grow at mid/high teens rates for many years. Moreover, its strong, but oligopolistic, banks charge wide spreads and high fees and, for the most part, under-serve smaller individuals and retailers, with the result that they are open to disruptive new entrants which can also exploit the under-banked nature of the economy." (Click here to see the full text)

7. Merck & Co., Inc. (NYSE: MRK)

Number of Hedge Fund Holders: 79

Merck & Co., Inc. (NYSE: MRK) is a healthcare company that is headquartered in New Jersey. It is ranked seventh on our list of 10 stocks Warren Buffett is selling. The stock has offered investors returns exceeding 6% over the course of the past year. Buffett has decreased his stake in the company by 38% in the past few months, and the holding now represents 0.5% of the investment portfolio of his hedge fund.

On July 6, Merck & Co., Inc. (NYSE: MRK) announced that regulatory bodies in the United States had approved an expanded label for Keytruda, a drug marketed by the firm for the treatment of patients with locally advanced cutaneous squamous cell carcinoma.

Out of the hedge funds being tracked by Insider Monkey, Nebraska-based investment firm Berkshire Hathaway is a leading shareholder in Merck & Co., Inc. (NYSE: MRK) with 17 million shares worth more than $1.3 billion.

Unlike Apple Inc. (NASDAQ: AAPL), The Coca-Cola Company (NYSE: KO), and Bank of America Corporation (NYSE: BAC), Merck & Co., Inc. (NYSE: MRK) is one of the stocks Warren Buffett is selling.

In its Q1 2021 investor letter, Artisan Partners highlighted a few stocks and Merck & Co., Inc. (NYSE: MRK) was one of them. Here is what the fund said:

“In Q1, we initiated a position in Merck, a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. We purchased Merck when the stock came under pressure in part on concerns that the newly minted Biden administration could implement regulatory changes and lower drug costs in the pharmaceutical industry. Recent, but anticipated changes to Merck’s management team have also weighed on shares, as have concerns over the company’s heavy reliance on immunotherapy treatment Keytruda. Notably, Merck is not getting much credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions. While Merck is undergoing a period of transition, we think the company’s fundamentals are strong and believe changes to management should be a catalyst for improvement.”

6. Axalta Coating Systems Ltd. (NYSE: AXTA)

Number of Hedge Fund Holders: 43

Axalta Coating Systems Ltd. (NYSE: AXTA) is a company that makes and sells high performance coating systems. It is placed sixth on our list of 10 stocks Warren Buffett is selling. The company’s shares have offered investors returns exceeding 36% over the course of the past twelve months. At the end of March this year, Berkshire Hathaway owned 13.8 million shares in the company that were worth $410 million, representing 0.15% of the portfolio. The fund had trimmed stake in the firm by 41% by March compared to December 2020.

On July 7, Axalta Coating Systems Ltd. (NYSE: AXTA) announced that it would purchase U-POL Holdings, a firm that makes and sells products primarily used in cars, in a deal close to $600 million.

At the end of the first quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Axalta Coating Systems Ltd. (NYSE: AXTA), down from 46 in the previous quarter worth $1.6 billion.

Unlike Apple Inc. (NASDAQ: AAPL), The Coca-Cola Company (NYSE: KO), and Bank of America Corporation (NYSE: BAC), Axalta Coating Systems Ltd. (NYSE: AXTA) is one of the stocks Warren Buffett is selling.

In its Q1 2021 investor letter, Ariel Investments highlighted a few stocks and Axalta Coating Systems Ltd. (NYSE: AXTA) was one of them. Here is what the fund said:

“While we did not exit any holdings during the quarter in Ariel Fund, we initiated a position in Axalta Coating Systems, Ltd. (AXTA) which is emerging from the shadow of its former parent, DuPont. We expect Axalta—a leading manufacturer of coatings for cars and trucks—to continue to gain market share from ongoing consolidation in its refinishing business and further margin improvement through cost savings programs.”

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Disclose. None. 10 Stocks Warren Buffett is Selling is originally published on Insider Monkey.